Transcription of USPS Future Business Model
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USPS Future Business Model
usps Future Business ModelMarch 2, 2010 McKinsey & Company1|Contents Recent context Base case minimal management actions Addressing the challenge Short term requirementsMcKinsey & Company2| usps is experiencing unprecedented losses SOURCE: usps ; 109-435 (PAEA) profit/loss$ billionsPostal Act 2006 signed into lawNote: All years in this document refer to Fiscal Years ending on Sept 301 Includes one-time $4 billion deferral2 Per 2010 Integrated Financial Plan (January Year-to-Date results are favorable to Plan) pre-funding,$ billionsKey drivers Revenue declines due to: E-diversion of First-Class Mail Down-trading from First-Class to Standard Mail Losses of advertising mail due to the recession RHB pre-funding requirement introduced by the PAEA Cost savings, while substantial, have been less than revenue declines due to high fixed costs of the networkNo rate increase 2003-2006 Recent ContextMcKinsey & Company3|Losses have been driven by volume declines, RHB pre-funding requirements and limitations on cost deferralCost pre-funding of change in net income 2006 vs.
1 Revenue declines calculating by applying 2009 prices against 2006-09 volume declines ... discount rates, future health care costs, the size of the workforce, and period of ... Retail locations Sortation facilities Preferred prices for some products (e.g.,
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